Exclusion
on the basis of race, colour, religion, ethnic background, national or
social origin exists in many nations under diverse social, economic and
political systems. India is just one of them. The concern about exclusion
at the policy level is primarily because of its consequences on economic
growth, and the inequality and deprivation that it brings to groups excluded
and discriminated against. Broadly speaking, social exclusion has been
defined as ‘the process through which individuals or groups are wholly
or partially excluded from full participation in the society within which
they live.’ Two defining characteristics of exclusion are particularly
emphasised: the societal relations (or institutions) that cause exclusion
and its consequence of deprivation in several spheres through the denial
of equal rights.

Amartya Sen draws attention to various meanings and dimensions of the
concept of social exclusion, distinguishing between a situation where
some people are being kept out, and where some people are being included
on deeply unfavourable terms, and described the two situations as ‘unfavourable
exclusion’ and ‘unfavourable inclusion’. ‘Unfavourable inclusion’ with
unequal treatment may bring on the same adverse effects as ‘unfavourable
exclusion’.

Sen also differentiates between ‘active and passive exclusion’. For causal
analysis and formulating policy responses, Sen argues that ‘it is important
to distinguish between ‘active exclusion’ — fostering of exclusion through
deliberate policy interventions by government or other agents (to exclude
some people from some opportunity) — and ‘passive exclusion’, which works
through the social process. There are no deliberate attempts to exclude
but the process may result in exclusion from a set of circumstances.’

Sen further distinguishes the ‘constitutive relevance’ of exclusion from
that of its ‘instrumental importance’. In the former, exclusion or deprivation
has an intrinsic importance of its own. For instance, not being able to
relate to others or take part in the life of the community can directly
impoverish a person’s life, in addition to the further deprivation it
may generate. This is different from social exclusion of ‘instrumental
importance’, in which the exclusion in itself is not impoverishing but
can lead to impoverishment of human life.

Further elaboration of the concepts of exclusion or discrimination has
come from mainstream economics in the context of race and gender. The
mainstream literature throws more light on discrimination that works through
markets and has developed the concept of market discrimination with some
analytical clarity. In the market discrimination framework, exclusion
may operate through restrictions on entry to markets and/or through ‘selective
inclusion’, but with unequal treatment in market and non-market transactions
(this is close to Sen’s concept of unfavourable inclusion).

The
focus of exclusion is the social group, not the individual. Exclusion
necessarily leads to denial of economic opportunities and powerlessness
but low income, poor productivity or low merit are not the original
criteria. Rather, they are the outcomes of exclusion

These
developments in social science literature enable one to comprehend the
meanings and manifestations of the concept of social exclusion and its
applicability to caste and ethnicity-based exclusion in India. The way
in which it has been developed in social science literature, the concept
of social exclusion in general and economic exclusion in particular essentially
refers to societal institutions (of exclusion), and their outcome (in
terms of deprivation). In order to understand the dimensions of exclusion,
therefore, it is necessary to understand the social relations which lead
to exclusion of certain groups, causing deprivation in multiple spheres
— civil, cultural, political and economic. For a broader understanding
of the concept of exclusion, insights into the societal process and institutions
of exclusions are as important as an understanding of the outcome of deprivation
for certain groups.

For conceptual clarity, it is necessary to recognise the group character
of exclusions. It is also equally necessary to recognise that economic
exclusion or discrimination is independent of income, productivity or
merit of individuals in the group. Often, people do get excluded from
markets due to lack of income, or from employment due to low productivity
or skill, or from admissions due to low merit. In the case of group-based
exclusion, on the other hand, the basis of exclusion is group identity
and not the economic characteristics of a group. The focus of exclusion
is the social group, not the individual. Exclusion necessarily leads to
denial of economic opportunities and powerlessness but low income, poor
productivity or low merit are not the original criteria. Rather, they
are the outcomes of exclusion associated with group identity. This group
characteristic needs to be recognised when we discuss policies and remedies
against discrimination. It is also possible that some individuals in the
group discriminated against may be economically better off and may have
some advantage in overcoming the effects of discrimination. But since
exclusion has a group focus, they would also suffer from discrimination
— perhaps not of same degree and magnitude as the poor members of their
group.

Discrimination,
growth, inequity and inter-group
conflict

Why are we concerned about economic discrimination? Is discrimination
only an equity issue, or does it also involve an economic cost to society?
Are the costs it imposes on society more social and political than economic?
The conclusions of mainstream economic theory indicate that economic discrimination,
particularly market discrimination, does hamper growth and creates income
inequalities and potential situations for inter-group conflict.

On the consequences of economic discrimination on growth, the theories
clearly imply an adverse impact on profits, wages and efficiency in the
allocation of labour. Economic discrimination slows down growth by reducing
efficiency due to less than optimal allocation of labour among firms and
in the economy (fewer than the optimal number of workers are employed,
who are discriminated against as they receive wages lower than their marginal
product), by reducing work commitment and efforts of workers who perceive
themselves to be victims of discrimination and by reducing the magnitude
of investment in human capital by groups discriminated against and the
return on this investment.

In the case of income distribution, it is quite clear that since exclusion
and discrimination involve the denial of access to resources, employment
and common facilities, it certainly impoverishes the lives of people from
excluded groups. It amounts to the denial of certain basic human rights.
Discrimination thus becomes an issue not only of economic growth but also
of equity. By exacerbating current inequality between groups, and by contributing
to its perpetuation from one generation to the next, discrimination and
exclusion also lead to inter-group conflict.

Sukhadeo
Thorat is Chairman of the University Grants Commission, Government of
India.
He is also Director of the Indian Institute of Dalit Studies and Professor
of Economics
at Jawaharlal Nehru University. He lives in New Delhi